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German Economics Ministry Hopes
To Build Faith in Securities Analysts

Handelsblatt

Updated Jan. 23, 2001 12:01 a.m. ET

BERLIN -- German Economics Minister Werner Mueller is preparing a new "code of ethics" to better regulate securities analysts. At the center of the plan would be a self-regulated system of compulsory guidelines to ensure independent and objective investment analysis, according to ministry officials.

The program is aimed at restoring confidence in Germany's Neuer Markt, the fast-growing technology exchange that suffered heavy losses in the second half of last year with the collapse of freshly-issued German technology stocks.

Among other measures, the Economics Ministry is considering a system of safeguards against conflicts of interest. This would include a rule that analysts can only issue reports on stocks that they don't own or aren't contained in their employers' portfolios.

"There is the impression that analysts at times promote certain securities out of particular interest," said Margareta Wolf, Mr. Mueller's parliamentary state-secretary and co-architect of the plan.

Ms. Wolf said in an interview with the Handelsblatt that the ministry will soon enter into consultations with outside experts about devising the best structure for ensuring compliance. She explained that the government cannot write the measures into law, but that it will instead will press for a system of self-regulation by a professional society.

The ministry hopes that sanctions might be imposed by a professional trade group for analysts, similar to professional societies for physicians or lawyers. The ministry already has contacted the Federal Association of Free Occupations, an interest group, about possible models for a professional society for securities analysts.

Guidelines also could include a list of prerequisites for entering the analysts' profession, such as education and professional training. New rules might also govern analysts' appearances in the media, or his connection with stock issuers.

The goal, explained an Economics Ministry spokesman, ''is a voluntary system of quality control for analysts in order to counter the drop in confidence in securities analysis.''